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Smart Summary

Factual and Procedural Background

The Petitioner, holding a CL-2/7 license, has been operating a liquor business in Anantpur village, Athani Taluk, Belagavi District. The State Government issued a policy notification dated 07.11.2016 to increase revenue by establishing liquor outlets through its agency, M.S.I.L, under CL-11C licenses at various locations. Following a survey, certain feasible locations for new liquor shops were identified, but Shiraguppi village was not included due to feasibility concerns. Despite public opposition from villagers and local legislators against establishing a liquor outlet in Shiraguppi, efforts were being made by authorities to set up the shop. The Petitioner contended that the establishment of an additional liquor shop in the vicinity would severely harm his existing business and claimed violation of his fundamental right under Article 19(1)(g) of the Constitution of India. The Writ Petition was filed challenging the proposed establishment of the new liquor shop.

Legal Issues Presented

  1. Whether the State Government’s policy notification dated 07.11.2016 creates any enforceable right in favor of a private liquor shop owner.
  2. Whether the establishment of a new liquor outlet by the State agency infringes the Petitioner’s fundamental right to carry on business under Article 19(1)(g) of the Constitution.
  3. Whether the Petitioner has a legal right to exclude competitors from carrying on liquor business in the area.

Arguments of the Parties

Petitioner’s Arguments

  • The Petitioner has been lawfully running his liquor business under a valid license without any prior objections or complaints.
  • The policy notification and the establishment of a new liquor outlet in Shiraguppi village violate his fundamental right under Article 19(1)(g) to carry on business.
  • The establishment of the new liquor shop would effectively destroy his business due to the small population and market size.
  • Public opposition from villagers and local legislators supports the contention that the new outlet is undesirable.

Respondent’s Arguments

  • The policy notification by the State does not create any vested or choate right for private liquor shop owners.
  • There is no fundamental right to trade in liquor under Article 19(1)(g), as held by the Apex Court.
  • The State is competent to enter into trade or business as a competitor without infringing fundamental rights of private traders.
  • The Petitioner has no legal right to exclude competitors from carrying on liquor business in the area.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Chakravarti Vs. Collector of Excise, 1972 (2) SCWR 340 There is no fundamental right to trade in liquor under Article 19(1)(g) of the Constitution. The Court relied on this precedent to hold that the Petitioner’s claim of fundamental right infringement was ill-founded.
Gloucester Grammar School case, (1410) YB 11 Hen IV, fo. 47, pl. 21, 23 Competition causing damage to business does not constitute legal injury unless a legal right is infringed (damnum sine injuria). The Court applied this principle to reject the Petitioner’s contention that the establishment of a rival liquor shop caused actionable damage.

Court's Reasoning and Analysis

The Court examined the State Government’s policy notification and found that it does not confer any vested rights on private liquor shop owners; it merely expresses a policy for establishing outlets through the State agency. The Court emphasized that the State is entitled to enter into trade or business as a competitor without infringing the fundamental rights of private individuals, referencing constitutional provisions and authoritative legal commentary. The Court rejected the Petitioner’s fundamental rights claim by relying on the Apex Court’s ruling in Chakravarti and the principle of damnum sine injuria illustrated by the Gloucester Grammar School case. The Petitioner’s grievance about business loss due to competition was held to be insufficient for legal relief as no legal right to exclude competitors was established. Consequently, the Writ Petition lacked merit and was dismissed at the admission stage. The Court allowed the Petitioner to seek redress through representation to the concerned authorities but declined to entertain the petition further.

Holding and Implications

The Writ Petition is dismissed at the admission stage.

The direct effect of this decision is that the Petitioner’s challenge to the establishment of a new liquor shop by the State agency is rejected, affirming the State’s right to enter into trade as a competitor. No new legal precedent was set; the ruling reinforces existing principles that trading in liquor is not a fundamental right and that competition causing business loss without infringement of legal rights does not warrant judicial intervention.

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    H.R. Krishnamurthy v. State Of Karnataka And Others

    The Petitioner a grantee of CL-2/7 license has been carrying on the liquor business at Anantpur village in Athani Taluk of Belagavi District.

    2. The State Government with intent to increase its revenue promulgated a policy decision vide Notification dated 07.11.2016 at Annexure-B to the Writ Petition to carry on the liquor business through its agency namely the 3rd Respondent M.S.I.L in various places in the State by establishing liquor outlets with CL-11C licenses.

    3. In furtherance of the said policy decision, the Petitioner contends, the jurisdictional authorities have after survey and study identified various places proposing to establish the liquor shops therein. A list of feasible places is at Annexure-C to the Writ Petition.

    4. The learned counsel for the Petitioner submits that, in the said Feasible List, the village of Shiraguppi does not figure apparently because the place is not feasible for establishment of Liquor-Shop.

    5. The Petitioner contends that, now the several villagers have opposed the proposed establishment of M.S.I.L outlet in Shiraguppi village having a population of 8,000 or so for selling the liquor. Despite that the Respondent-Authorities are making all out efforts at the instance of the local M.L.C for establishing a liquor shop. It is also stated that, the sitting M.L.A of Kagawad Constituency has notified to the 3rd and 6th Respondents about the public resentment against the proposal.

    6. The learned counsel for the Petitioner contends that, he has been running the liquor shop with the license duly granted and without any objection and complaints at any time till now. The village is small going by the population size. If one more liquor shop is established, that virtually amounts to striking the deathknel of Petitioners business. He further contends that, the proposed action is in gross violation of his fundamental right to carry on the business guaranteed under Article 19 (1)(g) of the Constitution of India.

    7. I have heard the learned counsel for the Petitioner and also the learned AGA Sri.Ravi Hosmani. I have also carefully perused the notification dated 07.11.2016 which expresses the policy decision of the State Government which lays down certain guidelines to be followed while issuing license for establishing the liquor outlets through the MSIL in various places in the State. The said policy decision is issued by the State for the purpose of its own trade and business.

    8. The provisions of the policy notification mentioned above does not create any choate right in favour of any private liquor shop owner at all. Therefore, the reliance of the counsel for the Petitioner on the provisions of the said notification is ill founded.

    9. Similarly, the contention of the counsel for the Petitioner that the said notification infringes his Fundamental Right to carry on the business in liquor is also ill founded in as much as there is no Fundamental Right for trading in liquor, as held by the Apex Court in the case of Chakravarti Vs. Collector of Excise 1972 (2) SCWR 340.

    10. The learned author Dr. Durga Das Basu in his magnum opus SHORTER CONSTITUTION OF INDIA, 15th Edition, Volume I, page 332 states as under: C1.(6) (ii) 1. xxxx

    2. The State may enter into a trade or industry causing a partial or complete elimination of private traders, not only for reasons of administrative policy, e.g., manufacture of salt or alcohol; or for mitigating the evils arising from the competitive system, e.g., for the better control of prices or quality of products or for the administration of public utility services, but also simply for the making of profit just as a private trader would do, e.g., carrying on the business of motor transport. There is no infringement of the right guaranteed by Art. 19(1)(g) where the State enters a trade merely as a competitor.

    11. Of all the forms of human society the greatest is the State says the great Jurist William Guthrie Salmond. It owns immense wealth and performs functions akin to a Corporate body. The age old tradition that the State/Government has no right to carry on trade or business for earning profits has withered away since long. The State is competent to enter into any trade or business like a private individual without a specific legislation sanctioning such activity. Art. 298 has been amended vide Constitution (7th Amendment) Act, 1956 to make it clear that the right to carry on a trade or business is included in the executive power of the Union or a State. It is thus competent for the Government to take up the business of banking or the exploitation of mineral resources in the exercise of its executive powers, and as a competitor of private traders.

    12. When the State or an instrumentality of the State ventures into the Corporate world or undertakes some activity of Trade or Business it assumes to itself the ordinary role of a Trader or a Businessman. In the modern world it is open to the State to adorn the mantle of a maga corporation, subject of course to the legislation.

    13. The contention of the learned counsel for the Petitioner that, establishment of one more liquor shop in his area will result into diminishing of his business that is being carried on with the license and therefore he has suffered damage is a classic case of damnum sine injuria. In Gloucester Grammar School case, (1410) YB 11 Hen IV, fo. 47, pl. 21, 23, the Defendant, a schoolmaster, had set up a rival school next door to the plaintiffs and boys/students from the plaintiffs school flocked to defendants, it was held that no action could be maintained for injunction or damages. Competition is no ground of action whatever damage it may cause, provided nobodys legal rights are infringed. The counsel for the Petitioner has not brought the notice of this Court any instrument having force of law under which he has a legal right to exclude any competitor establishing or running the liquor business.

    14. Thus, there is absolutely no merit in this Writ Petition and therefore the same is dismissed at the admission stage. However, this order shall not come in the way of Petitioner making representation to the concerned authorities for the redressal of his grievance in accordance with law.

    15. Since the main matter itself being dismissed, there is no need to consider the application for impleadment because the applicant too does not have no justiciable right. Sd/- JUDGE Ckk/

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    H.R. Krishnamurthy v. State Of Karnataka And Others
    (Apr 13, 2018)